On August 1, 2016 MorphoSys AG (FSE: MOR; Prime Standard Segment; TecDAX, OTC: MPSYY) reported its half-year report, outlining the key events of the first six months ending June 30, 2016 (Press release, MorphoSys, JUL 31, 2016, View Source [SID:1234514151]).
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Financial results for the first half of 2016
Group revenue in the first half of 2016 totaled EUR 24.3 million and EBIT amounted to
EUR -19.2 million. The previous year’s figures (revenue H1/2015: EUR 82.6 million; EBIT H1/2015: EUR 46.1 million) each included extraordinary effects in the amount of approximately EUR 59 million.
The Group’s liquidity position on June 30, 2016 equaled EUR 279.7 million (December 31, 2015: EUR 298.4 million).
The Company confirms its 2016 guidance for revenue in the range of EUR 47 million to EUR 52 million and EBIT between EUR -58 million and EUR -68 million.
Operating highlights of the second quarter of 2016
In early June 2016, MorphoSys presented updated clinical data from an ongoing phase 1/2a dose escalation study of MOR202 in multiple myeloma (MM) at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting. MOR202 in combination with immunomodulatory drugs showed a good response in heavily pretreated patients. Two complete responses were shown at a dose of 8 mg/kg in combination with pomalidomide. In the meantime, response rates further deepened under ongoing treatment. The next higher and final treatment cohort with a dose of 16 mg/kg plus pomalidomide has been started meanwhile.
MorphoSys also presented updated clinical data on the safety and efficacy of MOR208 in non-Hodgkin’s lymphoma (NHL) at the 2016 ASCO (Free ASCO Whitepaper) Annual Meeting. Patients with diffuse large B cell lymphoma (DLBCL) and indolent NHL showed long-lasting responses to the therapy up to 26 months.
In early April 2016, MorphoSys announced the initiation of a phase 2 clinical combination trial of MOR208 with the cancer drug lenalidomide (Revlimid) in patients suffering from DLBCL.
In mid-April, MorphoSys announced its partner GSK had initiated a phase 2 clinical study with GSK3196165 (formerly known as MOR103) in patients with inflammatory hand osteoarthritis.
Also in April 2016, MorphoSys announced the initiation of a phase 1 trial of MOR106, which is being co-developed with Galapagos against inflammatory diseases.
In May 2016, MorphoSys and the University of Texas MD Anderson Cancer Center announced a strategic alliance for the discovery and development of therapeutic antibodies against cancer.
On April 21, 2016, MorphoSys announced that its partner Novartis had confirmed that a phase 2b/3 study examining bimagrumab (BYM338) in sporadic Inclusion Body Myositis (sIBM) did not meet its primary endpoint. Clinical development will continue in sarcopenia and muscular atrophy after hip operations.
On April 4, 2016, MorphoSys announced it had filed a lawsuit with the United States (U.S.) District Court of Delaware against Janssen Biotech and Genmab for patent infringement. MorphoSys is seeking redress for the infringing manufacture, use and sale of Janssen’s and Genmab’s daratumumab, an antibody targeting CD38.
In early July, MorphoSys announced the receipt of a milestone payment from Novartis recorded in the second quarter of 2016. The payment was triggered by the initiation of a phase 1 clinical study of a novel HuCAL antibody for the prevention of thrombosis.
At the end of the second quarter of 2016, MorphoSys’s product pipeline comprised a total of 104 therapeutic antibodies, 27 of which are in clinical development.
In EURO million* 6-Months 2016 6-Months 2015
Group Revenues 24.3 82.6
Total Operating Expenses 43.5 40.9
Other Income/Expenses 0.1 4.4
Earnings Before Interest and Taxes – EBIT (19.2) 46.1
Consolidated Net Profit / (Loss) (18.8) 36.5
Total EPS, diluted, in EURO (0.72) 1.39
* Differences due to rounding
"The development of our most advanced proprietary programs MOR208 and MOR202 is progressing well. In the ongoing MOR202 trial, we have started the highest dosage cohorts of MOR202 alone and in combination with lenalidomide and pomalidomide, and we are very encouraged as we see response rates deepening over time," commented Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. "Meanwhile, Novartis has taken the twelfth antibody to emerge from our partnership into clinical trials, and we are looking forward to additional data from our broad development pipeline, including read-outs from Janssen’s phase 3 trials with guselkumab in psoriasis."
"With the results shown for the first half of 2016 we are on track to meet our targets for the full year," stated Jens Holstein, Chief Financial Officer of MorphoSys AG. "We are convinced that our solid financial position is perfectly used in investing in promising development candidates. We will pursue our strategy and remain focused on the expansion of our pipeline."
Financial Review of the First Six Months of 2016 (IFRS)
In comparison to the previous year, Group revenues declined to EUR 24.3 million (H1/2015: EUR 82.6 million). Revenues in the comparable period of 2016 contained a non-recurring effect in the amount of about EUR 59 million from the termination of the partnership with Celgene to co-develop and co-promote MOR202. Success-based payments amounted to 8%, or EUR 2.0 million (H1/2015: 2%, or EUR 2.0 million), of total revenue. The Proprietary Development segment recorded revenues of EUR 0.3 million (H1/2015: EUR 59.6 million). Revenues in the Partnered Discovery segment comprised EUR 23.9 million (H1/2015: EUR 23.0 million).
Total operating expenses for the first six months of 2016 amounted to EUR 43.5 million (H1/2015: EUR 40.9 million). Total research and development expenses were EUR 36.7 million (H1/2015: EUR 33.9 million). R&D expenses mainly consisted of costs for external laboratory services and personnel costs. General and administrative expenses decreased slightly to EUR 6.9 million (H1/2015: EUR 7.0 million). Earnings before interest and taxes (EBIT) amounted to EUR -19.2 million (H1/2015: EUR 46.1 million).
The Proprietary Development segment reported a segment EBIT of EUR -27.8 million (H1/2015: EUR 40.2 million), while Partnered Discovery showed a segment EBIT of EUR 15.1 million (H1/2015: EUR 12.5 million). Proprietary R&D expenses including technology development amounted to EUR 28.3 million (H1/2015: EUR 25.3 million).
On June 30, 2016, the Group’s liquidity position amounted to EUR 279.7 million compared to EUR 298.4 million on December 31, 2015. The Company’s liquidity is reflected in the balance sheet items "cash and cash equivalents", "available-for-sale financial assets", "bonds, available-for-sale" and current and non-current "financial assets classified as loans and receivables". The decline in liquidity was mainly the result of the use of cash for operations in the first six months of 2016 and the repurchase of shares for the Group’s long-term incentive programs.
Financial guidance for 2016
MorphoSys re-confirmed its guidance for 2016. MorphoSys anticipates total Group revenues in the range of EUR 47 million to EUR 52 million and expects EBIT to be in the range of EUR -58 million to EUR -68 million. Proprietary R&D expenses are expected to rise to EUR 76 million to EUR 83 million. This guidance does not include any potential in-licensing or co-development of additional development candidates.